Does Spanish Hotel Need Intermediaries for Success?

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Table of Contents

Introduction
Literature Review
Analysis
Conclusion
Reference List

Introduction

Aim

The report is aimed at identifying whether a typical hotel in Spain needs intermediaries to achieve success in the tourism industry or whether the specified type of entrepreneurship may attain success on its own merits.

Objectives

Answering the question above will require making several crucial steps. Particularly, the following objectives will have to be completed:

Viewing the existing tourism-related theories that set the background for the analysis and provide a framework to place the information within;
Locating the current trends in the tourism industry by carrying out a vast analysis of the latest studies on the subject matter and analyzing the current (2011–2015) statistical data;
Identifying new methods of booking and locating their advantages and disadvantages;
Specifying the options that the cooperation with intermediaries provides to an owner of a hotel located in Spain;
Checking the alternative options that an owner of a Spanish hotel has and comparing the outcomes of using them to those of cooperating with an intermediate.

Rationale

Working in the realm of the global economy means being able to cooperate with intermediaries, no matter what industry a company operates in (Anamaria & Maria-Christina 2013). Because of the necessity to correlate a variety of actions and make sure that the required deadlines are met to satisfy the needs of the target audiences, a firm has to be supported by a partner organization that may serve as the link between the entrepreneurship in question and a certain stakeholder (Haag 2012). The significance of such cooperation, however, can be questioned in the realm of the tourism industry, where a company can connect with the target customers directly and where very little need for intermediaries seems to emerge. Herein the rationale for the paper lies; it is imperative to identify whether an independent hotel can function in Spain without the assistance of intermediaries.

The answer to the question above depends heavily on a range of conditions starting from the company’s budget and scope to the range of details including the opportunities for the choice of the logistics strategy, the promotion tools used, etc. Herein the significance of identifying the key characteristics of the organization in question lies. To make the results of the investigation as objective as possible, one should consider a typical three-to-five-star hotel with the following range of services included:

The arrival and the departure of guests,
The reception of guests;
Room service;
Pool and sun-loungers;
Twice day room service;
Breakfast and a three-course dinner;
Daily newspaper;
Complementary cocktails;
Laundry, dry-cleaning, and shoe-shining services;
Free parking;
Free Wi-Fi internet access;
Hair dresser and other beauty services;
Doctor on call;
Babysitting services.

It should also be borne in mind that, in most modern hotels, rooms can be booked by calling the hotel staff directly or by making an order via the company’s site. Finally, the location of the hotel matters significantly, as those built in the vicinity of the beach, in the state capital, or in a close proximity to the key Spanish attractions, gain additional points among most tourists:

The total contribution of Travel & Tourism to GDP (including wider effects from investment, the supply chain and induced income impacts, see page 2) was EUR161.1bn in 2013 (15.7% of GDP) and is expected to grow by 2.0% to EUR164.3bn (15.9% of GDP) in 2014. It is forecast to rise by 1.9% pa to EUR198.3bn by 2024 (15.9% of GDP). (Travel & tourism 2012, p. 3).

According to recent data, Spain has been experiencing a large upheaval in the tourism sector (Heijs 2013). Particularly, the number of people visiting Spain has been increasing consistently over the past decade. According to the graph provided below, Spain is expecting an even greater number of tourists to come next summer (Fig. 1). Therefore, it can be assumed that setting a company in the designated industry can be viewed as a very reasonable move.

Graph 1. Number of Tourist Arrivals in Spain (2011–2013)

Literature Review

Working with Intermediaries

Having an intermediary presupposes enjoying sufficient help in the environment of the contemporary hotel business, as a partner is likely to take a range of responsibilities and, therefore, make the managers’ schedule less busy. A recent study points to the fact that an intermediary allows for an impressive boost of the hotel’s performance by increasing awareness regarding its services among the target denizens of the population. The specified characteristics of the partner intermediary are essential in the contemporary realm of the tourism and hospitality industry due to the rapidly increasing competition rates. Indeed, a closer look at the contemporary tourism niche in Spain will reveal that it is occupied by a substantive number of companies (Sönmez et al. 2013). Particularly, the recent increase in the number of tourist accommodations built over the past few years and the number of times that these facilities have been used should be brought up: In 2014, Spain was the most common tourism destination in the EU for non-residents (people coming from abroad), with 260 million nights spent in tourist accommodation establishments, or 21.5 % of the EU-28 total” (Tourism statistics, 2015, par. 10).

Distribution channels and how they work

A closer overview of the key purpose of a distribution channel will demonstrate that he key activities that distribution channels, in general, and tourism distribution channels, in particular, are responsible for, boil down to the marketing services. Specifically, it is the responsibility of the people in charge to make sure that the services of a particular hotel are promoted to the target denizens of the population and that the specified audience uses the corresponding services. In lieu of the specified services, the owner of a Spanish hotel may consider cheaper nonetheless efficient self-promotion tools such as active use of social media and the development of a team of competent marketers. It should be borne in mind, though, that different types of intermediaries have different services to offer; particularly, the retail travel agents (Turner 2012), wholesalers (Liu & Yang 2013), and international retailers (Villacé-Molinero, Reinares-Lara, & Ponzoa-Casado 2013) deserve to be mentioned as the essential representatives of the tourism intermediaries. The choice thereof depends heavily on the scope of the hotel in question; for instance, for the entrepreneur, who wishes to offer services to the members of the local population, the former two options are preferable, while the latter should be advised to the company attempting at expanding into the global market.

One must admit that the latter scenario requires the help of intermediaries in most cases due to a large number of customers that the firm needs to cater to. At this point, the marketing issue grows to reach the culture-related problems, such as the necessity to appeal to specific demographics that are characterized by a unique culture and, therefore, need an original promotion strategy.

In respect to the scenario in question, i.e., the means of attracting British customers to an independent hotel in Spain, one must consider the fact that the European countries have recently been enjoying a rather wide popularity due to the combination of affordable prices and the time constraints that most representatives of the target audience have. In other words, it is expected that Spanish hotels are going to be favoured by a range of European tourists, particularly, the British ones:

UK holiday makers are increasingly looking to do more with their holidays and are opting for shorter breaks. As a result, European destinations are becoming very popular. The convenience of short flight times and a wide variety of places to see and things to do, including both cultural and relaxation activities, has boosted visits to our closest neighbours. (Package vs. independent holidays 2014)

Pricing

In light of the fact that the environment of the global economy is extremely competitive, it is essential for an organization to assume a reasonable financial stance to gain the trust of customers and facilitate the environment, in which they would be willing to have the experience of cooperating with the hotel managers once again. In other words, reasonable pricing is crucial to establishing a close contact with the target denizens of the population and promoting the corresponding services successfully.

The influence that intermediaries have on the leaders of tourism-related entrepreneurships can be deemed as very strong. In other words, an intermediate organization is likely to change the mind of the hotel leaders once a rival firm decides to drop the prices and gain a significant competitive advantage over a more expensive entrepreneurship. Indeed, studies show that intermediaries are likely to bend the strategies used by the organizations operating in the tourism and hospitality industry (Abrahams et al. 2012). The influence in question is viewed as having its benefits and problems. For instance, the fact that intermediaries can point a company to a more adequate pricing approach can be deemed as rather positive and, therefore, worth encouraging. As long as a firm recognizes the needs of the target customers, is aware of the competition in the designated area, and is ready to compromise to gain new clients, the business can be considered successful. However, without a proper idea of how the financial framework of an organization works and what resources the firm in question has at hand, the agency may cause a disruption in the organization’s operations (Gupta 2013). These discrepancies in the financial strategy of the firm may lead to not only minor hiccups in its overall operational process but also a major crisis and the failure to meet its basic quality standards.

Working Without Intermediaries

Overview

It would be wrong to assume, though, that a company is entirely helpless without the assistance of the corresponding partners allowing it to broaden its distribution channels. With a well-developed strategy that helps a company coordinate its logistics strategy, customer relations, and product promotion, the chances of a Spanish hotel to succeed at least on a local level are rather high as long as the firm’s actions are prioritized.

Changes

In addition, a range of customers do not seem to be excited about booking a room in a hotel with the help of intermediaries (Rensmann 2012). The reasons for the specified phenomenon are quite obvious; people believe that, once contacting the hotel staff directly, they will be able to get their message across in a more efficient way and that the key information will not get lost or misinterpreted (Mihajlović 2014).

Booking

More importantly, the changes that have occurred to the process of booking over the past few years are quite drastic. The process of booking a room in a hotel has been simplified to going to the official site of a company and choosing the options from a list provided by the organization. The specified approach cannot be considered an attempt to avoid the use of the intermediaries’ services fully, though: the transfer from the use of travel agents to filling out a form for an online order only involves a shift from using the services of an actual person to the use of an online interface designed for the same purpose.

Analysis

Based on the research carried out above, one must admit that the significance of intermediaries in the tourism industry is rather high; moreover, it grows explicitly high as a lather number of people are appealed to by the company. In other words, the importance of having intermediaries in the global environment is doubtless. For an organization operation in Spain on a local level, however, the assistance of the specified services can be viewed as substantial, yet not indispensible.

In fact, the overview of the existing studies and the latest trends in the tourism industry shows that most customers would rather talk to the representatives of the hotel than their intermediaries when booking a room or asking for additional information (Haiyu & Qian 2014). The specified detail of a company’s functioning, therefore, defines the rates of customer satisfaction to a considerable degree. Hence, a small Spanish company offering local services should consider avoiding using intermediaries at least as far as the communication process is concerned. Therefore, it can be assumed that the use of intermediaries may become not only an excessive tool in managing a business in the designated industry but also the one that may jeopardize the success of the entire entrepreneurship. In other words, a Spanish hotel, especially the one that has a range of services and is set in the vicinity of the key sights or close to the coast, can refuse from using the services of intermediaries without any major damage to its annual profit margin as far as the cooperation with the target customers is concerned.

Methods of booking

When it comes to defining the significance of intermediaries, though, one must address the booking issue first. As it has been stressed above, the process of booking has undergone significant changes over the past few years, the option of an online booking being the key change in the specified area. Nowadays, the following options for booking a room in a hotel are available to customers:

making a call;
filing an order via the corresponding form on the company’s site.

It can be assumed that the importance of intermediaries in the field of room booking drops as the process of filing an order is getting increasingly simplified for the hotel managers. Indeed, prior to the use of the corresponding tools for processing the data supplied by the customers, the help of intermediaries was obvious; without extra staff, an organization of a comparatively large scale would not be able to process all requests and take account of every detail. However, nowadays, as the staff members have the chance of receiving the data already organized in the manner that is easy to process, delivering the designated services has become very simple, and the assistance of intermediaries is no longer required (see Fig. 1).

Seeing that the specified approach to booking hotel rooms has become a commonplace tool in the contemporary hospitality industry, the significance of the use of intermediaries in the course of managing the ordering process does not seem reasonable. As the evaluation of the recent studies carried out above shows, the opportunities that the specified services have to offer do not leave much room for the intermediaries to factor in. Quite on the contrary, the reinforcement of online tools used for booking has created the environment, in which no mediators between the hotel staff and the clients are required.

Seeing that the process of online booking contributes to a significant increase in the customers’ satisfaction rates, it will be more than reasonable to switch to the use of the corresponding electronic form. As the review of the recent studies carried out above has shown, most representatives of the target population prefer to use the online forms for submitting their order. The specified phenomenon can be attributed to the fact that the technological breakthrough occurring over the past few decades allows for a rapid and consistent improvement of the process of online booking by simplifying the key steps and providing users with additional options. Keeping in mind that “consumers’ major motivators to use the Internet are information gathering, communication, exploration of websites, and shopping” (Papatheodorou, 2015, p. 287), a company is likely to design a site with a customer-friendly interface and a variety of options for making an order without the assistance of any intermediaries. The simplification of the booking process sets the stage for a faster and a more efficient processing of the incoming orders.

One might argue that the specified innovation does not quite permit the direct contact with the hotel managers mentioned above. Credited as important in the development of relationships between the company and its clients, the specified process can be viewed as essential for establishing a strong link between the company and the clients. Indeed, as the literature analysis carried out above has shown, the significance of direct cooperation between a customer and the hotel managers is essential to the development of trustworthy relationships and the further foundation for increasing customer loyalty rates. The promotion of the interface that reduces the process of communication occurring between a customer and the hotel staff to a minimum, therefore, may be viewed as a threat to the establishment of the necessary communication patterns between the clients and the members of the organization.

Nevertheless, the fact that the new and improved interface allows for a faster processing of the client’s request and prevents major misunderstandings from occurring can be viewed as a significant improvement of the existing tools and a huge step forward in enhancing the hotel managers’ control over the aspects of its functioning that used to concern primarily the intermediaries. Particularly, the necessity to use the services of travel agents when providing customers with an opportunity to book a room are no longer needed, which means that the very concept of an intermediate in the hospitality become obsolete.

The issue of intermediaries as the means of promoting the hotel services to a larger number of people can be viewed as a rather reasonable idea seeing that the competition rates are very high in the specified area (Claveria et al. 2015). Getting rid of intermediaries presupposes that the organization must develop a perfectly working marketing tool and come up with a well put together marketing campaign. More importantly, in light of the fact that the target area can be defined as a highly competitive environment, the entrepreneurship members must elaborate on the design of a proper branding approach. In other words, the firm will have to come up with a unique brand product based on the set of services that it has to offer, its values and mission statement.

On the one hand, developing the brand image and the brand product on one’s own instead of using the assistance of the corresponding companies can be viewed as a sensible decision since an alien organization is highly likely to misinterpret the idea behind the company’s operations. On the other hand, for the SME that is going to expand its services and cater to the needs of different denizens of the population, it will be required to shape the brand image a bit each time when it is represented to a new set of target customers as the firm has to appeal to specific needs of each tier. Without the proper marketing research and the knowledge of the cultural specifics thereof, an entrepreneurship may misrepresent its product. To be more exact, the organization may incorporate the elements that are viewed as negative by the representatives of a particular culture in their brand product, therefore, averting the potential clientele from their product. The opposite scenario, however, is also a possibility; the specified phenomenon can lead to the development of false expectations among the target audience and the consequent disappointment as well as the following drop in the number of customers and their loyalty rates. Hence, a proper market research must be carried out, which is a rather complicated task that requires the assistance of a competent partner, an intermediary being the desirable one in the given scenario. Thus, it can be assumed that the process of brand development and its further promotion to the target audience will require either extra funding with the following redesign of the company’s financial strategy, or the use of the intermediaries’ help as far as the development of the brand product is concerned.

The setting, in which the organization in question operates, in its turn, also provides the evidence both against and in support of using intermediaries. For instance, the fact that the company was created and operates in Spain, one of the hottest tourist spots in the world, allows assuming that people will be immediately attracted to it as long as the pricing strategy is adequate. On the other hand, the abundance of similar services, which the Spanish tourism sector can be infamously characterized by, points to the fact that a tourism SME will be hardly noticeable among larger and honestly more successful organizations. Indeed, casting a single glance at the current map of the tourism-related facilities, particularly, hotels, in Spain, one will have to admit that the competition rates are very high (see Fig. 1). Apart from the fact that the market is dominated by the companies offering similar services and providing the same, if not better, quality, one should also bear in mind the need to create and sustain a brand that will be different from the ones designed by the rival firms. Herein the significance of developing a perfect brand image lies; unless the company makes itself memorable and attracting to the target denizens of the population, its success is jeopardized.

The tools that a Spanish company of a medium size has at its disposal as far as the promotion issues are concerned also lead to rather ambiguous results. For example, the fact that the use of social media as the tool for advertising the firm’s services is very affordable shows that the company set in Spain may attract quite a range of people and, therefore, become rather profitable. However, the necessity to be able to identify the current trends in the network promotion area and create the tool that will appeal to all members of the target population makes one question whether a medium company will be capable of attaining the necessary results. Using the assistance of an intermediary would be much more helpful in the specified case, seeing that the process of promotion will be steered by the people who know what they are doing.

The transportation issue should also be addressed as a major dent in the overall concept of avoiding the assistance of intermediaries in the tourism industry. Specifically, the fact that the company promises to greet the visitors and drive them to the hotel should be mentioned as a challenge given the large number of clients and the tight deadlines that the firm will have to deal with. In the specified scenario, arranging a schedule that is well put together is rather complicated and requires the use of rather costly digital tools.

At this point, however, one must mention the fact that the online tools, which are viewed as the means for the customers to get the necessary information across and communicate their needs can be viewed as another type of intermediaries. To be more exact, the very concept of online tools for filing an order and booking a room in a hotel can be viewed as a type of an intermediate that helps a customer and a manager of the hotel start the communication process. Indeed, by filling out the required form, a customer sends the message that would later on be processed by the corresponding member of the hotel staff and delivered to the people responsible for the quality assurance and the delivery of the corresponding services. Thus, in some sense, it can be assumed that the current situation in the tourism industry as far as the intermediaries and their services are concerned, should be viewed as the process of one type of intermediaries ousting the other one from the target area:

Last but definitely not least, the key characteristics of the target customers need to be brought up. As it has been stressed above, the present-day clientele of the tourism industry, in general, and the Spanish hotels, in particular, is represented by the people who are concerned with the issues related to economy, particularly, financing, and environmentalism: “Studies by IHEI (2002) have revealed that most tourists preferred to stay in hotels with a responsible environmental attitude. Indeed, almost all respondents (96%) indicated that they preferred to stay in hotels which take good care of the environment” (Mensah & Mensah 2013, p. 450).

It should be noted that the specified attitude goes beyond being concerned about the adherence to the sanitary norms by the hotel staff. Apart from the natural demand for the rooms to be maintained in perfect order and under the appropriate sanitary conditions, the specified requirement also presupposes that the company should display the corresponding environmentally-friendly ethical values and incorporate them into its vision, following them fully. The compliance with the existing requirements regarding the environmental concerns, however, becomes quite complicated once the organization is represented by the third party. Seeing that the corresponding intermediaries, including travel agencies and advisors, cannot possibly learn every single detail about the company’s functioning, its ethical stance, and environmental awareness issues, it is highly likely that the firm may be misrepresented to the target audience, i.e., the British customers. In other words, the use of the corresponding intermediaries can be viewed as a threat to the proper representation of the hotel services.

The pricing issue, in its turn, should be viewed as a major argument in favour of using the services of the companies in question (Ivanova et al. 2015). As the review of the recent sources on the subject matter carried out above has shown, the given type of agencies may be very helpful in bringing the prices for certain third-party organizations down. For instance, an intermediate organization is likely to succeed in persuading the leaders of a hotel to reconsider their pricing policy I order to retain a valuable client.

Therefore, it is essential to make sure that the customers are provided with the money saving options, such as a choice of a wide variety of rooms, the possibility to include a particular service in the list of the desired ones or, on the contrary, to exclude it from the range of the requested items. The details such as the ones listed above are quite hard to arrange and take account of as long as they are processed by a third-party organization and only then offered to the hotel manager. Because of the increased possibility for a human error, the use of intermediaries such as travel agents, travel advisors, etc. cannot be deemed as a reasonable step to take. Hence, it is imperative for the managers of a Spanish hotel to consider the use of online forms instead. Although they do not provide the communication that a company needs to develop strong relationships with the target audience, they promote a significant increase in the firm’s quality standards. As a result, it is expected that, by abandoning the services of intermediaries, including advisors and travel agents, the entrepreneurship based in Spain and working in the tourism industry will have an opportunity to reinforce its efficacy and boost its performance rates by meeting the customers’ demands in a far more efficient fashion.

Conclusion

Despite the challenges that the refusal from using the corresponding services of intermediaries are likely to trigger, there is an opportunity for a Spanish hotel to survive in the highly competitive environment that the tourism industry is without any intermediaries. Despite the fact that the cooperation with the latter is not restricted to the process of booking, one still has to admit that the specified issue has been the key aspect of the specified agencies’ operations. The creation of online tools that allow for booking a room, communicating with the representative of the hotel management, creating specific orders, etc., the significance of intermediaries has dropped significantly in the tourism industry realm.

Intermediaries can be a substantial help for the companies that are willing to focus on their further development and expansion into the global market, yet they obviously prevent a company from developing trustworthy relationships with customers. Standing in the firm’s way in the communication process and serving as the mediator as far as the services such as booking, intermediaries create the environment, in which the target audience remains detached from the organization and where the creation of premises for customer loyalty becomes rather complicated.

In addition, intermediaries cannot be credited for being as fast is the online tools used as the current and more technologically advanced alternative. The forms filled in by customers prevent a range of errors from occurring in the workplace, therefore, contributing to a consistent growth of the customer satisfaction rates. Furthermore, the specified innovations can be deemed as essential in increasing the speed of data processing, which is important for maintaining the customer satisfaction rates high and retaining its current competitiveness level. Seeing that a range of organizations employ the tools that allow for a fast and efficient acquisition, analysis, and usage of data, it is imperative that the entrepreneurship in question should be able to use the specified type of data to its advantage as well, which can be carried out with the help of the corresponding online tools. The use of intermediaries, on the other hand, can be viewed as obsolete in the designated area of a hotel’s operations.

Despite the fact that the use of intermediaries offers more room for a company to explore its opportunities for further expansion and focus on the quality of the product, they seem to hamper the growth process of an entrepreneurship operating in the tourism industry since cooperating with them is not the only and by far not the cheapest means of promoting an organization to the target denizens of the population. The significance of intermediaries has dropped greatly with the introduction of the tools that offer new opportunities in terms of the distribution channels choice and exploration.

Therefore, it can be assumed that running a hotel in Spain can be carried out without the services of intermediaries. Though admittedly a complicated task, the refusal from using the assistance of intermediaries will open a plethora of opportunities for the specified type of an organization in terms of the development of a promotion campaign, the design of the company’s brand product and establishing itself in the designated area as a strong and efficient organization.

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